InterGlobe Aviation (INDIGO) reported a 64% YoY dip in EBITDAR to INR8.7b (est. INR25.8b) and a net loss of INR26.1b (est. net loss of INR6.6b) in 2QFY26. However, EBITDA (ex-forex loss on lease liabilities) was INR34.5b (up 86% YoY), as forex loss stood at INR29b vs. INR2.4b in 2QFY25. Due to higher-than-expected currency depreciation, slower reduction in aircraft on the ground, and additional damp leases, the company expects an early single-digit increase in unit cost (ex-fuel and forex) in FY26 vs. FY25. However, management remains confident about a healthy international as well as domestic demand outlook, backed by an under-penetrated aviation market with favorable long-term demand.
OutlookWe expect its revenue/ EBITDAR/Adj. PAT to clock a CAGR of 11%/18%/14% over FY25-28. We value the stock at 11x FY27E EBITDAR to arrive at our TP of INR7,300. Reiterate BUY.
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